The Supreme Court, in a recent ruling held that a Suit for specific performance must be filed immediately after breach/ refusal. The Purchaser cannot wait for 1 or 2 years to file a Suit to obtain specific performance.
- An Agreement to Sell which was arrived at with between the Plaintiff/ Purchaser and the Vendor verbally and by recording the terms in a letter written in the handwriting of the Defendant/Vendor on 11 November 2002. It was the case of the Plaintiff that the letter was written in the presence of 3 other persons one of whom was the real estate broker for the deal. As per the letter, a Sale Deed was to be executed and registered on or before 15th March 2003 upon payment of full consideration of Rs. 15,10,000. it was the case of the Plaintiff that a sum of Rs. 10,001/- was paid the Plaintiff to the Defendant/ Vendor in advance.
- According to the Plaintiff, he approached the Defendant several times with the balance consideration to execute the Sale Deed in his favour however the Defendant kept postponing the execution of the Sale Deed. On 13th February 2003 the Plaintiff issued a legal notice to the Defendant stating that he is ready and willing to perform his part of the contract and called upon the Defendant to accept the balance consideration and execute a Sale Deed in favour of the Plaintiff. The Defendant, when is reply to the legal notice had denied the Agreement to Sell.
- On 17 October 2005 i.e. more that 2 years after the refusal to perform, the Plaintiff filed his Suit for specific performance. The Defendant in his Written Statement denied the Agreement to Sell and denied having received any advance towards the sale consideration.
- Before the Trial Court, the Plaintiff was able to prove the Agreement to Sell. The Trial Court also Decreed the Suit for specific performance after reaching a finding that the Plaintiff had also proved his readiness and willingness to perform his part of the contract on the basis that he was a businessman and he had sufficient means to pay the balance consideration of Rs. 15,00,000/- to the Defendant.
- The Defendant challenged the Judgment and Decree of the Trial Court before the High Court. The High Court upheld the Judgment and Decree of the Trial Court.
- The Defendant/ Vendor approached the Supreme Court challenging the concurrent judgments of the Trial Court and the High Court.
- The Supreme Court overturned the Judgments of the High Court and the Trial Court and ordered the refund of the amount paid as advance with interest. The Supreme Court did so on the basis that in a Suit for specific performance the Plaintiff is required to show his readiness and willingness and ability to perform his part of the contract by adducing cogent evidence. However, no such evidence was led before the Trial Court other than contending that the Plaintiff was a businessman. The Supreme Court held that it was the bounden duty of the Plaintiff to prove that all along until final decision of the Suit, he was ready and willing to perform his part of the contract. It was his bounden duty to prove his readiness and willingness by adducing evidence. This crucial facet has to be determined by considering all circumstances including availability of funds a mere statement of readiness and willingness in the plaint would not suffice.
- The Supreme Court also took note of the fact that the Suit for specific performance was filed 2 years after the alleged breach of the Contract the Supreme Court held that while exercising discretion in Suit for specific performance, the courts should bear in mind that when the parties prescribed play time for taking certain steps for completion of the transaction that must have some significance and therefore the time/period prescribed cannot be ignored. The courts will apply greater scrutiny and strictness when considering whether the Purchaser was ready and willing to perform this part of the contract and every Suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time limits stipulated in the Agreement. The courts will also frown upon Suits which are not filed immediately after the breach/ refusal. The fact that limitation is 3 years does not mean that a Purchaser can wait for 2 or more years to file a Suit and obtain specific performance. The 3 year period is intended to assist the Purchaser in special cases as for example, where the major part of the consideration has been paid to the Vendor and possession has been delivered in part performance where equity shifts in favour of the Purchaser.1
By - Chaitanyaa Bhandarkar
- Supreme Court Civil Appeal No.4703 of 2022 dated 12th July 2022